Corporate Service Provider Business Amendment 2013 (Sept 26th)

Summary

This is a draft Bermuda bill that would amend the Corporate Service Provider Business Act 2012 to introduce a tiered licensing regime, expand the Authority's supervisory powers, and make related consequential changes to other statutes. As a draft, it is not yet in force; it will commence on a day appointed by the Minister via Gazette notice.

• Tiered licensing: Creates two licence classes for corporate service providers: an Unlimited Licence (covers all corporate services) and a Limited Licence (excludes certain services under sections 2(2)(a) and 2(2)(c)(vii)); applicants must state which class they are applying for.
• Licence conditions: Gives the Authority power to impose conditions on the scope of services or manner of operating a corporate service provider business, and to vary or remove such conditions on application.
• Transitional period: Extends the transitional period in section 68 of the principal Act from 12 months to two years, with a further extension possible by Ministerial notice in the Gazette.
• Corporate governance and prudence: Requires undertakings to implement corporate governance policies proportionate to their nature, size, complexity and risk profile; removes the fixed board composition requirement; expands the prudent-conduct test to include compliance with anti-money laundering, anti-terrorist financing, sanctions rules and codes of practice; and requires maintenance of appropriate insurance cover.
• Consequential amendments: Amends the Exchange Control Regulations 1973, Exempted Partnerships Act 1992 and Limited Partnership Act 1883 to align references to corporate service providers with the new unlimited licence category, and introduces a 14-day beneficial ownership notification requirement for permit companies.

The explanatory memorandum notes that under current requirements persons carrying on corporate service provider business must be licensed by 31 December 2013, while this amendment would allow applications for a new licence up to 31 December 2014, or longer if extended by the Minister.

Key obligations

• Applicants for a corporate service provider licence must specify whether they seek an Unlimited or Limited Licence.
• Undertakings must implement corporate governance policies and processes appropriate to their nature, size, complexity and risk profile.
• Undertakings must maintain insurance cover appropriate to the nature and scale of their operations.
• Permit companies must inform the Controller within 14 days when a beneficial owner reaches a 10% or greater beneficial ownership threshold due to a transfer.
• Persons carrying on corporate service provider business must be licensed (by 31 December 2013 under current rules, or apply by 31 December 2014 under this amendment, or such longer period as the Minister may allow).

Applies to

corporate service providers, permit companies, exempted partnerships, limited partnerships

Deadlines

• 31 December 2013: Current requirement for any person providing corporate service provider business to be licensed.
• 31 December 2014: Deadline under this amendment for applications to be made for a new corporate service provider licence, or such longer period as the Minister may appoint.
• 14 days: Period within which a permit company must inform the Controller after a beneficial owner reaches a 10% or greater ownership threshold via transfer.
• two years: Extended transitional period under amended section 68 of the principal Act (replacing the previous 12 months), or such longer period as the Minister may appoint by Gazette notice.

Related documents

• This document amends Exchange Control Regulations 1973